NEW YORK, March 8 (IFR) - ABS investors are finally showing
resistance to a falling yield environment after a year of
relentless buying of paper that is now trading near record lows.
At least two deals faced pushback this week from investors
who refused to participate if they were not paid the yield they
demanded. That meant the deals, though successfully placed, were
not as oversubscribed as recent deals that securitised the same
A US$250m trade from CLI Funding through its Seacube
Container vehicle that securitised a pool of cash flows from the
sale and lease of containers was only 1.5 times covered.
Previous offerings of such collateral were at least three times
Market sources said some investors bailed out of the
transaction because the issuer was looking to price it at a
yield way below their expectations.
Seacube priced Single A-rated Class A notes with a weighted
average life of 5 years with a yield of 2.85%, only the second
time ever a container lease ABS has dipped below 3%. The
investors who did not participate wanted a yield of 3%.
In February, a TAL Advantage V 2013-1 container lease
offering also printed with a yield of 2.85%.
Auto lender Santander, which along with AmeriCredit is one
of most prolific issuers in subprime auto ABS, was not spared
One of the tranches on Santander's US$1.27bn 2013-2 Series
this week, a Triple B-rated 4.13-year slice, was initially heard
to offer whisper levels of interpolated swaps plus mid 100s area
before official guidance was released at 165bp area and final
pricing was set at 185bp.
As a comparable, the 4.06-year Triple B rated piece from a
previous offering by the issuer in January was priced 25bp
tighter at interpolated swaps plus 160bp.
The 2.79-year Double A and 3.50-year Single A tranches were
printed at interpolated swaps plus 85bp and 135bp compared to
70bp and 120bp in the prior series.
The resistance to some deals is not all that surprising,
according to some market participants, and is way overdue given
the price levels that have been achieved over the past few
months. Secondary levels of ABS were already reflecting an end
to the falling yield cycle, said bankers.
ABS investors were also taking a slower and more deliberate
approach to new issues this week and were trying to get a little
more spread before issuers could price up their deals.
Some on the buyside decided to sit on cash and wait for
higher yielding transactions before deploying more capital.
"Investors are anticipating a busy March pipeline and
expecting more attractive investment opportunities, including
more non-flow ABS transactions offering an incremental yield
pickup," said Jay Steiner, head of banking and origination,
structured credit in the Americas at Deutsche Bank.
A lot of investor attention was diverted by this week's
US$1.8bn American Tower Trust senior secured revenue securities
2013-1/2. The transaction represented the largest non-consumer
Triple A rated ABS offering post-crisis, and is the only
Triple-A rated secured tower transaction in the market.
American Tower refinanced its US$1.75bn Series 2007-1
Securities (6.97 years tenor, 5.608% blended coupon) with a two
tranche new issue at a blended coupon of 2.825% and weighted
average life of 8.6 years.
The two slices offered tenors of five and ten-years and were
priced at Treasuries plus 75bp and 115bp. Both tranches were
multiple times oversubscribed with more than 85 unique investors
from both the structured and corporate side participating.
While the issuer has issued corporate bonds in the past,
bankers said American Tower saved approximately 80bp by using
the ABS space as opposed to unsecured funding.
For other related fixed-income quotations, stories and
guides to Reuters pages, please double click on the symbol:
U.S. corporate bond price quotations...
U.S. credit default swap column........
U.S. credit default swap news..........
European corporate bond market report..
European corporate bond market report..
Credit default swap guide..............
Fixed income guide......
U.S. swap spreads report...............
U.S. Treasury market report............
U.S. Treasury outlook...
U.S. municipal bond market report......